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No revenue deal for state budget yet as Monday deadline looms

"It is our plan to stay here until we get some sort of agreement."




HARRISBURG -- Come Monday night, Gov. Wolf will likely find himself in the same position he did last year: deciding whether to allow a multibillion-dollar spending bill to lapse into law, even though there is no plan for how to pay for it.

Though the Republican-controlled legislature continued trying to find common ground on a revenue package Sunday, late at night it showed no sign of a deal.

Senate Majority Leader Jake Corman (R., Centre) said late Sunday that from a logistical standpoint, it was becoming increasingly unlikely that a revenue package would be passed by Monday night. He said the Senate would stay at the Capitol and keep working on a deal.

"It is our plan to stay here until we get some sort of agreement," he said.

Nonetheless, he said, the governor had rejected a plan he and House Majority Leader Dave Reed (R, Indiana) had delivered to him Sunday, one that would have included new revenue from expanding gambling in the state.

"It's been rejected, and no further discussions have happened since," Corman said shortly before 10 p.m. "It wasn't enough. Put it that way."

Lawmakers are running out of time. By the end of Monday, Wolf, a Democrat, will have to decide whether to sign, veto, or allow to become law the nearly $32 billion spending plan the legislature approved just before the July 1 start of the new fiscal year.

Wolf has not shown his hand. He has said only that he is optimistic the legislature will iron out differences and send him a revenue package.

"The governor continues to work with all parties to come to an agreement on a responsible package to balance the budget," spokesman J.J. Abbott said in a statement Sunday night.

Last summer, when faced with the same predicament, Wolf allowed the spending plan to lapse into law without his signature, saying he believed the legislature would swiftly deliver a revenue plan. It was a leap of faith that paid off -- the legislature delivered within days. A prolonged impasse like the one Wolf faced in his first year in office was averted. This year, Wolf might be forced to decide to take the same gamble.

State law requires that the budget be balanced. Without a revenue plan, the $32 billion blueprint that the legislature sent the governor on June 30 will not be in balance, as it needs new revenue to prop it up.

Negotiators have discussed raising new dollars through a mix of borrowing, gambling expansion and, possibly, further privatizing alcohol sales. Tax-averse Republicans who control both legislative chambers view those as acceptable alternatives to raising either the personal income or sales tax, two proposals that Wolf has backed in recent years as a way to generate recurring and sustainable dollars for the state’s cash-strapped budget.

A number of GOP legislators have also rejected the idea of imposing a new tax on natural gas extraction, an idea supported by Wolf, legislative Democrats, and a number of moderate Republicans, many from the Philadelphia suburbs.

The stakes are high.

Last week, Standard & Poor’s warned that it was placing Pennsylvania on a negative “credit watch,” a move the credit agency said reflected the state’s “eroding financial position” and signs that the state would not enact a structurally balanced budget.

Wolf and Senate Republicans have said they would consider borrowing money to cover the $1.5 billion shortfall in last fiscal year’s budget, the largest since the recession. House Republicans, however, have refused to say whether they support that idea.

But much of the squabbling has been over how much to expand gambling. House Republicans have backed a proposal that would legalize up to 40,000 slot-like machines called video-gaming terminals (VGTs) in bars, taverns, restaurants, and other establishments with liquor licenses.

For days, Senate Republican leaders, who are wary of VGTs, have said they will not be part of a final deal on gambling expansion. They have also said that all sides were nearing agreement on the issue and that the deal would include creating 10 satellite casinos across the state.

Those mini-casinos would be allowed to have up to 700 slot machines and 100 table games, Senate Republican lawmakers have said. The state’s already licensed casinos would be given the first shot at bidding on licenses to run them, and the new casinos would have to be no closer than 25 miles from current ones.

First Published July 9, 2017 9:40 PM


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